The stock’s valuation, at an adjusted 12.4 times enterprise value to earnings before interest, tax, depreciation and amortization, or EV/EBITDA, on 2019 estimates, is well below its five-year average, RHB said, noting the implied EV/EBITDA was at 15.0 times.

RHB noted that competition in Singapore is increasing, with two new mobile virtual network Operators (MVNO), Zero Mobile and Zero 1, entering an already crowded market, riding on Singtel’s network. That brings the number of MVNOs to three, with another two expected in coming months, it said. Zero Mobile’s offering is undercutting rival M1, it noted.

Less vulnerable?

Singtel’s subscribers are usually higher average revenue per user (ARPU) and enterprise customers, which are usually the least price sensitive and therefore, Singtel is less vulnerable to new competition, especially as the bulk of its customers are locked into bundled offers, RHB added.

Additionally, proceeds from the sale of Netlink Trust, totalling S$1.1 billion “provides headroom for further opportunistic acquisitions,” the note said. SingTel recently raised its stake in Indian telco Bharti Airtel to 39.5 percent from 38.6 percent, through an increased stake in its subsidiary Bharti Telecom.

RHB maintained its Buy rating on SingTel, with a target price of S$4.10; on Friday, the stock closed at S$3.49, up 2.05 percent.